Corporate governance in emerging markets: A survey

The OECD Principles of Corporate Governance

Although researchers have applied different theoretical perspectives to illustrate the relationship between corporate environmental responsibility and profitability, to date theories are contested and empirical findings are inconclusive. Therefore, the aim of this research was to present empirical evidence regarding the influence of engaging in environmental responsibility on corporate market value, as the first study to be applied in the Egyptian context. The findings demonstrate that the market compensates those firms that care for their environment, as environmental responsibility exerted a positive and significant coefficient on the firm market value measured by Tobin's q ratio. This aligns stakeholder theory as well as resource-based theory arguments, and provides supporting evidence for those studies that have concluded that it pays to be environmentally responsive. Copyright © 2007 John Wiley & Sons, Ltd and ERP Environment.

Does the market value corporate environmental responsibility? An empirical examination

Data envelopment analysis (DEA) is commonly used to measure the relative efficiency of decision-making units. Often, in a second stage, a regression model is estimated to relate DEA efficiency scores to exogenous factors. In this paper, we argue that the traditional linear or tobit approaches to second-stage DEA analysis do not constitute a reasonable data-generating process for DEA scores. Under the assumption that DEA scores can be treated as descriptive measures of the relative performance of units in the sample, we show that using fractional regression models is the most natural way of modeling bounded, proportional response variables such as DEA scores. We also propose generalizations of these models and, given that DEA scores take frequently the value of unity, examine the use of two-part models in this framework. Several tests suitable for assessing the specification of each alternative model are also discussed.

Fractional regression models for second stage DEA efficiency analyses

An evaluation of European airlines’ operational performance

In this study, we look for empirical support for the hypothesis that there is a positive relationship between the levels of corporate governance quality across firms and the relative efficiency levels of these firms. This hypothesis is related to Liebenstein's idea of X-efficiency. We use the data envelopment analysis (DEA)estimator to obtain proxies for X-[in]efficiency of firms in our sample and then analyze them with respect to different ownership structures by comparing distributions and aggregate efficiencies across different groups. We also use truncated regression with bootstrap, following Simar and Wilson (2003), to infer on relationship of inefficiency to various indicators of quality of corporate governance, ownership variables, as well as industry and year specific dummies. The data is coming from 7 industries in Ukraine.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID886105_code574037.pdf?abstractid=886105

Corporate Governance and Firm's Efficiency: The Case of a Transitional Country, Ukraine

In this study, we look for empirical support for the hypothesis that there is a positive relationship between the levels of corporate governance quality across firms and the relative efficiency levels of these firms. This hypothesis is related to Leibenstein's idea of X-efficiency. We use the data envelopment analysis (DEA) estimator to obtain proxies for X-[in]efficiency of firms in our sample and then analyze them with respect to different ownership structures by comparing distributions and aggregate efficiencies across different groups. We also use truncated regression with bootstrap, following Simar and Wilson Estimation and influence in two stage, semi-parametric models of production process, Simar and Zelenyuk (2003) to infer on relationship of inefficiency to various indicators of quality of corporate governance, ownership variables, as well as industry and year specific dummies. The data is coming from seven industries in Ukraine.

/pdf/corporate-governance-and-firm-s-efficiency-the-case-of-a-3nhgj2fuom.pdf

Corporate governance and firm's efficiency: the case of a transitional country, Ukraine ∗

The goal of this paper is to examine the effects of different ownership structures and of the quality of corporate governance on the Farrell measure of efficiency. Data Envelopment Analysis and Limited Dependent Variable Estimations are applied to the set of Ukrainian joint-stock companies listed on the main Ukrainian stock exchange, First Securities Trading System. Domestic ownership of the organization is found to enhance efficiency the most, whereas managerial ownership has a detrimental effect on efficiency. Foreign owned firms are relatively inefficient; however foreign ownership is found to have a positive and significant effect on corporate governance quality. Concentrated ownership rights (including state ownership) improve efficiency, possibly reflecting country-specific factors. The quality of corporate governance is found to have a positive impact on the efficiency of domestically owned firms. Copyright © 2005 John Wiley & Sons, Ltd.

https://www.jstor.org/stable/pdfplus/25151403.pdf

Corporate governance, ownership structure and corporate efficiency: the case of Ukraine

This study investigates the impact of overall level as well as of separate elements of corporate governance on enterprise performance for open joint-stock companies (OJSC) in transitional country, Ukraine. We use unique data on corporate governance choices for above 5 thousand firms (about a universe of OJSCs in Ukraine) for three years from 2000 to 2002. We construct overall index of corporate governance (UCGI) and sub-indices of corporate governance describing such aspects of corporate governance as shareholder rights, transparency/information disclosure, board independence and chairman independence. We use two different sets of instrumental variables to deal with econometrics problems. First, we use regional variations in social trust factors to instrument for corporate governance choices in cross-sectional framework. Our instruments include political diversity, religion (number of Christian churches) and ethnic diversity across 24 regions in Ukraine. We thoroughly discuss the plausibility of our instruments in a separate section. The hypothesis that our instruments are weak is rejected based on critical values of Stock-Yogo test and thus we use two-stage least squares (2SLS) estimator, and two-stage generalized method of moments (2SGMM) estimator to account for arbitrary heteroskedasticity. Additionally we use time-invariant variables plus time-varying religion variable as instruments after first-differencing transformation. Since in this case we are not able to reject the hypothesis that our instruments are weak we employ also limited-information maximum likelihood estimator (LIML) and testing procedures that are robust to the presence of weak instruments. We find strong evidence that corporate governance predicts firm performance in the transition context. We could not reject the null that UCGI is exogenous in various cross-sectional specifications but we document presence of endogeneity when first differencing estimator employed. Our results predict that one-point-increase in our UCGI index would result in around 0.4-1.9% increase in performance; and based on HOLS results worst to best change in UCGI predicts about 40% increase in company's performance. Additionally we document nonlinear effect of corporate governance suggesting that companies with lower then average level of governance incur losses from an incremental improvement in their governance while those with higher then average level of governance enjoy excessive improvement from that in their performance. We document statistically and economically strong effects of shareholder rights, transparency and board independence on performance. We also find a negative effect of the independence of the board chairman on performance.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID969978_code574037.pdf?abstractid=877913&rulid=125789&mirid=3

Does Corporate Governance Causally Predict Firm Performance? Panel Data and Instrumental Variables Evidence

The goal of this paper is to examine the effects of different ownership structures and of the quality of corporate governance on the Farrell measure of efficiency. Data Envelopment Analysis and Limited Dependent Variable Estimations are applied to the set of Ukrainian joint-stock companies listed on the main Ukrainian stock exchange, First Securities Trading System. Domestic ownership of the organization is found to enhance efficiency the most, whereas managerial ownership has a detrimental effect on efficiency. Foreign owned firms are relatively inefficient; however foreign ownership is found to have a positive and significant effect on corporate governance quality. Concentrated ownership rights (including state ownership) improve efficiency, possibly reflecting country-specific factors. The quality of corporate governance is found to have a positive impact on the efficiency of domestically owned firms.

Vitaliy Zheka

Papers

Corporate Governance and Firm's Efficiency: The Case of a Transitional Country, Ukraine

Corporate governance and firm's efficiency: the case of a transitional country, Ukraine ∗

Corporate governance, ownership structure and corporate efficiency: the case of Ukraine

Does Corporate Governance Causally Predict Firm Performance? Panel Data and Instrumental Variables Evidence

Corporate Governance, Ownership Structure and Corporate Efficiency: The Case of Ukraine